Score one for The Clinton Group.
The activist investor firm successfully forced change at ValueVision Media Inc., from new board members to a new chief executive officer: Mark Bozek.
The Clinton Group and the former board at ValueVision, which operates the TV and Internet shopping site ShopHQ, had been locked in a bitter battle for board change since November.
That battle included a proxy fight in which proxy-advisory firms Glass Lewis and ISS — in a rare move — supported either the majority or the entire slate of board nominees recommended by The Clinton Group.
That fight ended last week at the company’s annual meeting of shareholders in which investors voted in favor of four from the slate proposed by The Clinton Group. The final tally of all votes wasn’t immediately available.
Those four include Bozek, former ceo of HSN Inc., which operates Home Shopping Network, and cofounder of e-commerce platform Evine.com; Bob Rosenblatt, former interim president of flash-sales site Ideeli.com and former group president and chief operating officer of Tommy Hilfiger Corp.; Fred Siegel, former senior vice president and marketing head for QVC, and Tom Beers, ceo of Fremantle Media NA.
They join four existing ValueVision board members who were reelected: John Buck, non-executive chairman of Medica; Landel Hobbs, ceo of LCH Enterprises LL; Lowell W. Robinson, former chief financial officer and chief operating officer of MIVA Inc., and most recently a director of The Jones Group from 2005 until earlier this year when Sycamore Partners completed its acquisition of the apparel firm, and Keith Stewart, ceo.
Ousted board members include Jill Botway, William Evans, Sean Orr and Randy Ronning.
Upon Stewart’s resignationas ceo and board member, the reconstituted ValueVision board on Sunday unanimously elected Bozek as the company’s ceo. Rosenblatt was named non-executive chairman. They also voted for The Clinton Group’s nominee Ron Frasch to join the board. Frasch is the former president and chief merchandising officer of Saks Fifth Avenue. The five new members give The Clinton Group majority control of the eight-member ValueVision board.
Bozek said of his new position, “For anyone in retail that operates in the multichannel space, the opportunity to have access to over 87 million homes is a tremendous advantage, and one that I suspect many in the e-commerce space would relish. The opportunities are boundless, and I am especially thrilled to have Ron Frasch as a member of our board of directors.”
Bozek, who was also previously a senior vice president at QVC, was clear on his priority as the new ceo of ShopHQ: “In a business that’s completely on dollars per minute generated by the sale of merchandise, among the initial focuses will be generating as many brands and products that deliver more dollars per minute than ever before.”
The Clinton Group, like other activist investors, invests in public firms that aren’t managed optimally. ValueVision’s ShopHQ site was once known as Shop NBC. It sells merchandise in the fashion, accessories and beauty categories.
Gregory P. Taxin, managing director at The Clinton Group, said, “We thought [ValueVision] was a clear-cut case for change. The overwhelming number of professional investors who voted in this proxy fight voted for change. The vote was not a close call.”
Taxin noted that the old management team and board “fought very hard, and spent much of the company’s money to keep their tenure,” and said that in general, most companies tend to be more willing to listen to the ideas and criticisms of investors.
“This is unusual in that the company and the board flat-out refused to make the changes we were recommending, to the point where it made sense for us to go to fellow shareholders to determine whether they would support the changes we were looking for, and that’s what made this [become] a more public fight than usual,” Taxin said.
Taxin added that there’s a lesson to be learned in the case of ValueVision: “This is a warning to companies that are not performing well, and to management teams and boards that are not thinking objectively or independently about shareholder value. Shareholders, if you [companies, the management team and boards] don’t ensure that business is being run well, will vote against you.”
While activism isn’t new, it certainly seems to be in vogue as investors push for the creation of shareholder value. Earlier this year, activist investor Engaged Capital pushed for new board members at Abercrombie & Fitch.
Chairman Arthur Martinez said shortly after he was named to the A&F board, “We will propose a slate to our shareholders. What our activist friend chooses to do, he will do. We will continue to evolve and grow this board in terms of its capabilities.” Martinez also emphasized that he was having ongoing dialogues with all investors. A&F and Engage have since settled their issues and a mutually agreed-upon slate was presented to the shareholders at its annual meeting on Thursday.
Looking ahead, there’s some jockeying for position as unhappy founders at Lululemon Athletica Inc. and American Apparel Inc. are expressing their displeasure over decisions at the board level. While a different animal from an activist initiating the agitation for change, activists could get involved if either Lululemon’s Chip Wilson or American Apparel’s Dov Charney can muster support from investors who agree that they have the best vision for creating additional value at the company each has founded.